Groupon Marketing

With the success of Groupon, there is a new form of marketing, “Groupon Marketing” which can be used to grow small businesses. Groupon is a powerful new tool which can grow a business or destroy it if used incorrectly.

Yes it is a coupon which is one of the oldest and most proven forms of marketing. But there are significant nuances in Groupon.

How Groupon works Analytics

Groupon is a coupon program at it’s core. They deliver your coupon to their audience and they split 50% of initial revenue with you. No initial money out of pocket for the business owner.

Know your ideal prospects and clients

You must have a clear idea of your “best prospects and clients/customers”. Bringing in hundreds or thousands of poor fit prospects into your business is a recipe for disaster. You must have a good idea of the “lifetime value of a client”.

Who can succeed with Groupon

If you are in a business to consumer (B2C) business, with a good profit margin and large “lifetime value of a client”, you may be a good fit for Groupon. B2C services with large fixed costs and low incremental costs of service delivery are great fits(martial arts classes, spas, chiropractors, dentists).If you can structure an initial offer to bring in “prospects” which develops high value leads it will work well. If you offer a “$50 tooth whitening” or “$50 window washing” or “$50 Termite inspection”, these all are good examples, if the “larger value service or say “$500 Dental treatment” or “$5000 home painting” or “$2000 tenting of a home for termites” is the larger “offer” after the “lead gen” offer is accepted.

If those cases, the lifetime value of a client may be large enough that Groupon makes sense.

Groupon Failures

Who should not use Groupon:

B2B, Business to business companies will have trouble making it be profitable

B2C, businesses with a low profit margin

B2C, businesses with a low “lifetime value of client”

Horror stories include businesses who were poor fits from the beginning…businesses with a low profit margin or limited ability to serve all the leads who bought their special offer.

Example

Imagine you have a $100 coupon offer for auto repair and oil change. It ordinarily costs you $75 to deliver this service. You make this Groupon $100 special offer. You sell 100 coupons. Groupon gets 50% or $5,000. You get 50% (and you pay credit card processing) and collect $5,000. Sounds, great right?

It cost you $50 a lead to get 100 leads. Lets imagine your auto shop can serve 10 incremental cars a day. It will take you 10 days to serve these coupon people, on top of you normal daily work. But if your shop can only handle 2 more clients a day, it will take you 50 days (almost 2 months) to handle these people “on top of your normal business”.

These new people discounted people can grow you prospect list, but you must collect their contact info and nurture them from specials shoppers to regular customers/clients for your business. You must have an effective lead collection system in place.

Groupon Risks

“Lead Capture risk” Lead capture and nurture to regular client. Without this in place you are courting disaster.

“The fulfillment risk” is you can flood your business with expensive leads while delivering poorer service to your normal bread and butter clients.

Groupon Marketing Made Simple

Would you like to know how to harness Groupon to grow your business? Contact us.